5 Common Misconceptions About Employer Of Record As any international HR manager knows, managing a global workforce presents unique challenges in different regions. Growing companies often use an employer of record (EOR) arrangement to avoid complications of directly establishing local entities.
An employer of record (EOR) enables companies to legally hire and assign employees to work internationally while ensuring compliance with local employment laws and regulations. Yet numerous myths persist around this global hiring model.
Let’s examine five common misconceptions about the EOR model and how it can streamline international talent acquisition for businesses of all sizes.
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Misconception #1: EOR Only Benefits Small Businesses
Many think an EOR solely helps startups who are looking to branch out globally. However, large multinationals rely on EORs worldwide. Major brands value streamlined expansion processes for compliant, rapid growth across borders.
EORs take on legal entity management so HR can focus on core tasks. Automakers have saved millions through careful partnerships abroad rather than redundant HR infrastructure in dozens of markets.
Company size is irrelevant here – all growing organizations gain efficiency by accessing global talent pools via an EOR.
Misconception #2: EOR Outsources Vital HR Duties
Some wrongly assume your entire HR team leaves when selecting an EOR. Leadership retains control over strategic hiring decisions and daily workforce management. The EOR handles location-specific responsibilities like regulatory compliance, payroll administration, and localized benefits coordination.
Oversight remains fully internal while legal responsibilities shift externally according to local legislation. An experienced EOR thus extends valued HR services internationally instead of replacing internal staff.
Misconception #3: Communication Breaks Down
Others fear communication barriers will form between distant HR teams. Modern technology allows seamless collaboration worldwide. Shared cloud databases give leadership and international HR partners equal insight into all regions simultaneously.
Video conferencing bridges distance while account managers provide regional expertise. Properly administered EOR partnerships maintain consistent dialogue regardless of location.
Misconception #4: Cultural Nuances Get Lost
Some worry cultural understanding suffers through an EOR model. However, reputable providers hire locals in all countries of operation. Regional HR specialists live and work on the ground, intimately familiar with cultural norms.
They advise leadership on best sharing company values while respecting differences. A quality EOR enriches global diversity rather than hinders it through locally-led, culturally sensitive HR solutions.
Misconception #5: EOR Arrangements Come With Hidden Fees
Many balk at upfront EOR costs without considering total long-term entity expenses. Sure, providers set transparent rates, but compare those to endless legal, tax, and accounting consultants required abroad.
EORs foresee compliance changes as well, avoiding client unpredictability. All-inclusive EOR subscriptions simplify planning and provide invaluable localized insights to avoid non-compliance fines or other surprises.
Their economies of scale free up budgets better spent fostering growth, not back-office bureaucracy.
In Conclusion
While EOR arrangements disrupt outdated approaches, their benefits far outweigh infrequent drawbacks. Respected EOR providers help both startups and Fortune 500s thrive globally through simplified, cost-effective solutions. An open mind about employers of record services removes the most pervasive myths holding companies back from the model’s rewards.